This year Don and his son purchased real estate for an investment. The price of the property was $576,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $340,000 of the purchase price and his son provided the remaining $236,000. Has Don made a taxable gift and, if so, in what amount?

Question

Quizplus · Accepted Answer

When a property is owned jointly with the right of survivorship, it means that upon the death of one of the joint tenants, the other tenant automatically receives the deceased tenant's interest in the property. In this case, Don and his son each own 50% of the property, and therefore each owns a half interest that is valued at $288,000.

Since Don provided $340,000 of the purchase price, he has made a gift of $52,000 to his son ($288,000 - $236,000), which exceeds the annual exclusion amount of $15,000. Therefore, $37,000 ($52,000 - $15,000) of the gift will count against Don's lifetime gift and estate tax exemption, and will require him to file a gift tax return.

This Year Don and His Son Purchased Real Estate for an Investment